Firms' location sensitivity to the EU environmental policies

The European Union (EU) is the most ambitious actor and self-proclaimed leader in international climate policy. Therefore, the EU plays a key role in finding the most effective legislative approach to address environmental issues globally. This work aims at evaluating the EU's current legislative approach by examining the impact of the EU's climate change and air protection environmental standards on heavily polluting firms operating within the EU’s industrial sector. In other words, this paper empirically investigates the firm's location sensitivity to the EU environmental policies proxied by greenhouse gas emissions. From the theoretical point of view, the research, thus, examines whether the so called "Pollution haven hypothesis" prevails over the so called "Porter hypothesis".